Cheek v. United States
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| Cheek v. United States | ||||||||||||
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| Argued October 3, 1990 Decided January 8, 1991 |
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| Holding | ||||||||||||
| (1) A genuine, good faith belief that one is not violating the Federal tax law based on a misunderstanding caused by the complexity of the tax law is a defense to a charge of "willfulness", even though that belief is irrational or unreasonable; (2) a belief that the Federal income tax is unconstitutional is not a misunderstanding caused by the complexity of the tax law, and is not a defense to a charge of "willfulness", even if that belief is genuine and is held in good faith. | ||||||||||||
| Court membership | ||||||||||||
| Chief Justice: William Rehnquist Associate Justices: Byron White, Thurgood Marshall, Harry Blackmun, John Paul Stevens, Sandra Day O'Connor, Antonin Scalia, Anthony Kennedy, David Souter |
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| Case opinions | ||||||||||||
| Majority by: White Joined by: Rehnquist, Stevens, O'Connor, Kennedy Concurrence by: Scalia Dissent by: Blackmun Joined by: Marshall Souter took no part in the consideration or decision of the case. |
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| Laws applied | ||||||||||||
| Title 26, § 7201 of the United States Code | ||||||||||||
Cheek v. United States, 498 U.S. 192 (1991), was a case in which the United States Supreme Court held that a tax protester's belief that he was not violating the Federal tax law based on a misunderstanding caused by the complexity of the tax law itself -- if a genuine, good faith, actually held belief -- would be a valid defense to charges of tax evasion, willful failure to timely file income tax returns, and willful failure to timely pay taxes, even though that belief is irrational or unreasonable. The Court also ruled that a belief that the tax law is invalid or unconstitutional is not based on a misunderstanding caused by the complexity of the tax law, and is not a defense.
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[edit] Facts
The defendant, John L. Cheek, became a pilot for American Airlines in 1973. Through the tax year 1979, Cheek filed Federal income tax returns. Beginning with the 1980 tax year, Cheek stopped filing Federal income tax returns. He began claiming up to sixty allowances on his Form W-4 withholding statement submitted to his employer.
Cheek was eventually charged with six counts of willfully failing to file Federal income tax returns under for 1980, 1981, 1983, 1984, 1985 and 1986. He was also charged with tax evasion under for years 1980, 1981, and 1983.[1]
Between 1982 and 1986, John Cheek was also involved in at least four civil cases challenging the Federal income tax.[2] Among the arguments raised in those cases were: (1) the argument that he was not a taxpayer within the meaning of the law; (2) the argument that wages are not income; (3) the argument that the Sixteenth Amendment does not authorize an income tax on individuals; and (4) the argument that the Sixteenth Amendment is unenforceable. In all four cases, the courts stated that these arguments were erroneous. Cheek also attended two criminal trials of individuals charged with tax crimes.[3]
At his own criminal trial, John Cheek represented himself.[4]He also testified that around 1978 he had begun attending seminars conducted by a group that believed that the Federal income tax system was unconstitutional. Cheek stated that based on the seminars and his own study, he sincerely believed that the tax laws were being unconstitutionally enforced, and that his actions were lawful. Cheek specifically testified about his own interpretations of the U.S. Constitution, court opinions, common law and other materials. He testified that he had relied on those materials in concluding that he was not required to file tax returns, that he was not required to pay income taxes, and that he could claim refunds of the money withheld from his pay. Cheek also contended that his wages from a private employer (American Airlines) did not constitute income under the internal revenue laws. Cheek argued that he therefore had acted without the "willfulness" that was required for a criminal tax conviction.[5]
[edit] The erroneous jury instructions
During the jury deliberations, the jury asked the trial judge for a clarification on the law. The judge instructed the jury that an "honest but unreasonable belief is not a defense, and does not negate willfulness." The trial court also instructed the jury that "[a]dvice or research resulting in the conclusion that wages of a privately employed person are not income or that the tax laws are unconstitutional is not objectively reasonable, and cannot serve as the basis for a good faith misunderstanding of the law defense."[6]
[edit] Procedural history
John Cheek was convicted, and the United States Court of Appeals for the Seventh Circuit upheld the conviction. Cheek was granted a hearing by the United States Supreme Court. Cheek contended that the trial court had erred by instructing the jury that a misunderstanding of the law had to be objectively reasonable to negate willfulness.
[edit] Discussion
Under U.S. criminal law, the general rule is that ignorance of the law or a mistake of law is not a valid defense to criminal prosecution.[7] However, there are exceptions to that rule. Some U.S. criminal statutes provide for what are known as "specific intent" crimes, where ignorance of the law may be a valid defense. The criminal tax statutes in the Cheek case are examples of statutes for specific intent crimes, where actual ignorance of the law is a valid defense.[8]
[edit] Holdings
The two essential holdings of the Supreme Court were:
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- A genuine, good faith belief that one is not violating the Federal tax law based on a misunderstanding caused by the complexity of the tax law (e.g., the complexity of the statute itself) is a defense to a charge of "willfulness", even though that belief is irrational or unreasonable.[9]
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- A belief that the Federal income tax is unconstitutional is not a misunderstanding caused by the complexity of the tax law, and is not a defense to a charge of "willfulness", even if that belief is genuine and is held in good faith.[10]
[edit] Rationale
The Supreme Court distinguished arguments about constitutionality from statutory arguments about the law. The Court, in an opinion by Justice White, ruled that the defendant's belief that the tax laws were unconstitutional was not a defense, no matter how honestly that belief might have been held. To the contrary, Cheek's acknowledgement that his failure to file tax returns was based on a belief about constitutionality was viewed by the Supreme Court as possible evidence of (1) Cheek's awareness of the tax law itself (the Court stating that constitutional arguments reveal the taxpayer's "full knowledge of the provisions at issue and a studied conclusion, however wrong, that those provisions are invalid and unenforceable",[11]) and (2) of the voluntary, intentional violation of a known legal duty imposed by the tax law.
However, John Cheek's statutory argument -- his asserted belief that his wages were not income under the statute (the Internal Revenue Code itself) -- was ruled by the Supreme Court to be a possible ground for a valid defense even though that belief was not objectively reasonable, provided that the belief was actually held in good faith. The Supreme Court ruled that by instructing the jury that the defendant's statutory argument had to be based on a belief that was "objectively reasonable," the trial judge had erroneously transformed what should have been treated as a factual issue (for the jury to decide) into a legal issue. The Supreme Court stated that whether the defendant acted willfully is a factual issue to be determined by the jury, and that a valid defense of lack of willfulness could be found even though the defendant's belief is not "objectively reasonable." The Supreme Court remanded the case to the trial court for a retrial.
[edit] Dissent
Justices Harry Blackmun and Thurgood Marshall agreed with the Court's ruling that a belief that the Federal income tax is unconstitutional is not a defense to a charge of willfulness. These two justices complained, however, about the Court's ruling that a genuine, good faith belief based on a misunderstanding of the Internal Revenue Code is a valid defense. In dissent, Justice Blackmun wrote:
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- It seems to me that we are concerned in this case not with "the complexity of the tax laws," ante, at 200, but with the income tax law in its most elementary and basic aspect: Is a wage earner a taxpayer and are wages income? [ . . . ] [I]t is incomprehensible to me how, in this day, more than 70 years after the institution of our present federal income tax system with the passage of the Revenue Act of 1913, 38 Stat. 166, any taxpayer of competent mentality can assert as his defense to charges of statutory willfulness the proposition that the wage he receives for his labor is not income, irrespective of a cult that says otherwise and advises the gullible to resist income tax collections. One might note in passing that this particular taxpayer, after all, was a licensed pilot for one of our major commercial airlines; he presumably was a person of at least minimum intellectual competence.
[edit] Later developments
Some tax protesters have cited this case for the argument that it is possible to avoid paying taxes without punishment by using the kind of defense raised by Cheek about a good faith misunderstanding of the tax law itself. The Cheek defense is available, however, only in a criminal trial, and not as a method to avoid the payment of tax.
In the case of John Cheek:
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- The 48-year-old airline pilot said in a telephone interview that he had changed his views about paying taxes and was now "straightened out with the I.R.S." after paying the money he owed the Government and "substantial" penalties. From now on, he said, he intended to pay taxes.[12]
Further, the case was remanded for a re-trial. In the re-trial, the jury rejected Mr. Cheek's argument that he actually "believed" that wages were not taxable. He was again convicted. The second conviction was upheld by the United States Court of Appeals for the Seventh Circuit, and the United States Supreme Court let that decision stand by denying John Cheek's petition for a writ of certiorari.[13]John L. Cheek was sentenced to a year and a day in prison, and was released from prison in December of 1992.[14]
[edit] See also
[edit] Notes
- ^ Cheek v. United States, 498 U.S. 192 at 194 (1991) (hereinafter Cheek).
- ^ See, e.g., Schaut v. United States, 585 F. Supp. 137, 84-1 U.S. Tax Cas. (CCH) paragr. 9308 (N.D. Ill. 1984) and Cheek v. Doe, 110 F.R.D. 420, 421 (N.D. Ill. 1984).
- ^ Cheek, 498 U.S. at 194-95.
- ^ Cheek, 498 U.S. at 195.
- ^ Cheek, 498 U.S. at 195-96.
- ^ Cheek, 498 U.S. at 197.
- ^ Cheek, 498 U.S. at 199.
- ^ Cheek, 498 U.S. at 200.
- ^ Cheek, 498 U.S. at 203.
- ^ Cheek, 498 U.S. at 206. John Cheek's arguments about the constitutionality of the tax law in various prior court cases were expressly labeled "frivolous" by the Supreme Court. See Cheek, 498 U.S. at 204-205. For example, John Cheek had specifically contended prior to his conviction that the Sixteenth Amendment did not authorize a tax on wages and salaries, but only on gain or profit. See Cheek, 498 U.S. at 196.
- ^ Cheek, 498 U.S. at 205.
- ^ Linda Greenhouse, "Supreme Court Ruling Supports Tax Protester", Jan. 9, 1991, New York Times, at [1].
- ^ United States v. Cheek, 3 F.3d 1057, 93-2 U.S. Tax Cas. (CCH) paragr. 50,473 (7th Cir. 1993), cert. denied, 510 U.S. 1112, 114 S. Ct. 1055 (1994).
- ^ John L. Cheek, prisoner number 96657-024, Federal Bureau of Prisons, United States Department of Justice, at[2].
